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The Death of Capitalism

Submitted by smartknowledgeu on 01/24/2010 21:00 -0400

Bankers are destroying Capitalism. Unfortunately, most
Westerners won’t realize this until five years from now, when the middle class
has been forcibly relegated to the ranks of the poor. And this isn’t just a
situation that will afflict America but it will likely afflict Japan and many
countries in the EU such as the UK, Spain, and Greece just to name a few. But for the purposes of this essay,
let’s examine how bankers have destroyed capitalism in the USA.

In 2009, when almost every major US bank manufactured
profits out of thin air and declared themselves financially healthy by (1) changing
their regular reporting periods to exclude months in which huge losses
occurred; (2) changing their definitions of bad debt, and (3) by revaluing
their assets courtesy of FASB, particularly their commercial real estate
portfolios, at fantasy land valuations that they will never receive in the open
market, these events all marked the continuation of the Enronization of America
that is ushering in the death of capitalism. The systemic injection of fraud
and deceit into nearly every aspect of American life, has been unfolding for
decades, even prior to the Enron scandal itself. In 2009, Bank of America CEO Ken Lewis testified that former
US Treasury Secretary and ex-Goldman Sachs CEO Hank Paulson instructed him to
disobey securities law and conceal material losses in the Merrill Lynch merger
from investors. Lewis additionally testified that Paulson threatened to fire
him and his entire board if he tried to back out of the Merrill deal. These
kinds of activities, devoid of all morals and ethics, have been occurring
regularly within the financial industry for decades. It only seems as if such
transgressions are more numerous today because of the recent attention given
them in the media, but in reality, they have neither proliferated in frequency
nor in expanded in their level of egregiousness.

Anyone that has ever worked for a Wall Street firm is well
aware of the danger an analyst brings upon himself if he refuses to tow the
official corporate party line regarding stock ratings for a company that is
simultaneously closing a financially significant deal with another division of
his firm. Even though this
atmosphere of “unspoken coercion” of inflated stock ratings existed for
decades, when the bull was strong on Wall Street, very few journalists found
this story newsworthy. Even though regulatory laws were passed many years ago
to separate investment banking interests from securities interests within the
same firm, the percent of US stocks covered by Wall Street firms rated as a
“buy or hold” actually increased from 89% (2003) to 93% (2007) after the
passage of new laws that were supposed to discourage firms from granting
inflated stock ratings. Who in their right mind would ever believe that 93% of
all stocks covered by Wall Street should be rated a “buy or hold” and that only
7% should be rated a “sell”? Of course, in Wall Street parlance, insiders know
that “hold” really means “sell” but still, this is a level of deceit
nonetheless.

When regulations are enforced through self-monitoring and
self-policing as is too often the situation, and when all financial regulatory
agencies are themselves lacking in integrity and transparency, new regulations
can be enacted every day without effect. Self-regulations and regulations
imposed by morally bankrupt people within a broken and corrupt system have
never been effective. That’s why I have zero expectations about the efficacy of
any new regulations being proposed today beyond their efficacy as a highly
efficient smokescreen for politicians to hide behind. How quickly we forget
that in 2002, UBS Paine Webber financial consultant Chang Wu was fired by
branch manager Patrick Mendenhall no more than several hours after Enron
executive Aaron Brown complained to Mr. Mendenhall about an email Mr. Wu had
sent to his clients. In the email that Mr. Brown found “extremely disturbing”, Mr.
Wu had advised all of his clients to sell Enron stock due to massive liquidity
problems he had uncovered, even though UBS Paine Webber had rated it a strong
buy. (Source: CNN, “Financial
Adviser Fired Over Enron Advice”, 26 March 2002). After Mendenhall fired Wu, UBS sent an email to their
clients retracting Mr. Wu’s statement, informing them that Enron stock was
“likely heading higher than lower from here on out.” (Source: New York Post, 4
October 2006). Of course, we all
know that just several months later, Enron went bankrupt.

We should be cognizant that in light of the Enron scandal,
this level of fraud has not been a recent development. In 2001-2002, a partial
list of companies that had to re-declare earnings due to erroneous information
contained in previous publicly released earnings announcements included the
following companies: Adelphia, AOL Time Warner, Arthur Anderson,
Bristol-Meyers, Squibb, Freddie Mac, ImClone, Citigroup, General Electric, JP
Morgan, Tyco, Worldcom, Dynergy, Enron, General Motors, AIG and Hyundai. Many of the company names on this list
are the same companies that have been exposed as withholding material
information from their investors about their financial health either in this
year or in recent years. And let us not forget that in the early 2000’s, JP
Morgan, Morgan Stanley, Goldman Sachs, Credit Suisse First Boston, Lehman
Brothers, UBS Warburg, and US
Bankcorp Piper Jaffray all paid fines between $32,5000,000 and $400,000,000 for
engaging in deceptive and unethical behavior (Source: PBS Frontline, “The
Global Settlement, an Overview”, 28 April 2003).

In regard to such systemic fraud, unfortunately, little has
changed today. With the blessings
of FASB and our current administration, almost every major bank in the US is
cooking their books today (i.e. consider that, of $4.2 billion of Bank of
America’s declared earnings during one quarter last year, $1.9 billion was
attributable to a non-recurring event, the sale of China Construction Bank
shares, and $2.2 billion was attributable to a fantasy-land valuation of
Merrill Lynch structured notes).
As I previously stated, though the Enronization of America did not start
with the Enron scandal, the consequences of systemic duplicity have finally
caught up to its perpetrators and have now reached its tipping point today. If
we take a moment to dwell on what aspects of our financial system have been infiltrated
by fraud, it would include our financial ratings system led by Standard &
Poors and Moodys, our mortgage system, our banking system, our equities
analysts and financial analysts, our accounting system, our regulatory agencies
including FASB, the SEC and the CFTC, our media, our politicians, our corporate
executives, and lastly and most significantly, our monetary system. In fact,
though the current media focus seems to be on morally bankrupt financial
executives and institutions, the fact is that this scenario could not have
proliferated over the past several decades if the problem did not run much
deeper than just our financial infrastructure. If other integral aspects of our society were uncompromised,
they would have flushed out the dishonesty so prevalent in our financial
industry many years ago. So the real question that needs to be examined is the following - How exactly did fraud in
America become so systemic?

The Fraud of our Legal System

The first phase of the Enronization of America occurred
through our legal system. Most of us make the grave mistake of equating our
legal system with morality, but law and morality are creatures that often
reside at opposite ends of the spectrum under our current legal system. Since those that make our laws are also
the same immoral people that control our financial system, often our laws have
very little concern with governing morality and much more focus on ensuring
that the very elements that hold power maintain or expand their power. Most Americans automatically equate a
behavior as right or wrong depending on whether a law defines such behavior as
legal or illegal without any critical thought, and this is a mistake. The fact
is that today, many laws have nothing to do with morality. In fact, our legal system is laden with
such hypocrisy at times that it allows for the very same behavior to be defined
as legal if a financial elite is engaging in the behavior but illegal if a “regular Joe” is engaging in it.

Consider that Richard Strong, CEO of the former Strong
Mutual Funds, admitted to skimming $1.8 million from his clients’ accounts that
essentially was the equivalent of stealing, yet under the auspices of our
current legal system, Mr. Strong was not sentenced to spend a single day in
jail (Source: Washington Post, 23 June 2004). Yet there is little question that
if a hungry, unemployed man steals food equivalent to a fraction of the money
Richard Strong stole, he will go to jail if caught. How is this possible? It is
possible because very little honor is left in our legal system. Stealing $1.8
million may be legal under our current legal system, but it certainly is not
moral. In 2005 and 2006, CEOs from the 11 largest firms in America paid themselves
$865,000,000 in salary even though their “leadership” caused a loss of
$64,000,000,000 of market capitalization in their firms during the same
equivalent time period (Source: BBC News, 22 June 2006). Yet, if an employee of this firm performed
as miserably as did their CEOs, their reward would almost certainly be a pink
slip, not millions upon millions in bonuses, salaries and perks. Paying oneself
hundreds of millions in salaries and hundreds of millions more in bonuses
despite contributing to unemployment and the substantial loss of shareholder
wealth is certainly unethical, yet it will always remain 100% legal. All you
have to do is review the financial payouts from last year to know that not a
single iota of decency has been injected into our financial system. When firms
like Merrill Lynch went bankrupt and then took money from US taxpayers to pay
their executives more than $4 billion of bonuses, this only added insult to the
injury their bankruptcy inflicted upon many American families.

Were our legal system truly to regulate morality, the
executive suites of America’s largest financial corporations would transform
into ghost towns as a great percentage of these executives would be jailed.
There are numerous actions that are considered “legal” today that would be
illegal if moral and righteous men were making our laws, and even a handful of
“illegal” behaviors that would be re-categorized as legal. Suffice it to say,
if our legal system has been Enronized, our regulatory agencies by default,
have also been Enronized. The Enronization of our Securities and Exchange
Commission (SEC) was never more apparent in their failure to shut down Bernard
Madoff and protect American families even though hedge fund manager Harry
Markopoulos informed the SEC both in writing and by phone of the fraudulent
nature of Madoff’s fund for nine years. During Congressional testimony
regarding this matter, Mr. Markopoulos testified that when the SEC repeatedly
ignored his warnings about the fraudulent nature of Madoff’s practices, that he
feared for his, as well as his family’s safety, a damning indictment of not
only the SEC’s abject failure to regulate, but also of their propensity to
protect powerful men in the financial industry whether they are breaking the
law or not. The continuing failure of other regulatory agencies such as the
CFTC to act in the interests of American people is also apparent in their
recent approval of financial products such as the E-mini Gold and Silver
futures contracts introduced on April 19th, 2009 that settle strictly in cash.
Futures contracts that specifically prohibit the delivery of the underlying
commodity explicitly allow its participants to naked short a commodity with
zero intention of every purchasing or holding the underlying physical asset in
their possession and thus establishing a fraudulent market for a commodity that
can never resemble the free market dynamics of its physical market. The lesson here is this – if you are a
small player, the regulatory agencies will still prosecute criminal activity,
but if your rank is among the financial elites, they will do nothing.

The Fraud of our Media

The second phase of America’s Enronization has occurred
through the mass media. Ben
Bagdikian, the author of the seminal work on media mergers and consolidation
titled The Media Monopoly, has noted that almost all major media in the US is
now under the control of five major conglomerates - Time Warner, Disney,
Murdoch's News Corporation, Bertelsmann of Germany, and Viacom. To be fair and objective in this matter,
there are a handful of major news organizations not controlled by the “big
five”, including The New York Times, The Washington Post, The Chicago Tribune
and Los Angeles Times. However, Badgikian’s basic premise that the problem with
our media is "not one of universal evil among the corporations or their
leaders" nor one of "a general practice of constant suppression and
close monitoring of the content of their media companies", but one of a contradiction between the
values of free enterprise and the interests of giant conglomerates, is still
valid. Today, many important news stories are reported on the internet by
bloggers well before they attract the necessary viral proliferation to draw the
attention of major media outlets.
Today, a strong case can be made for the argument that one will find a
greater level of truth and integrity in internet reporting than through major information
distribution channels such as CNBC.

The Destruction of Our Critical Thinking Skills

The fraud of our media has evolved into the fraud
of our educational system. Though this is a topic that commands the devotion of
an entirely separate article, the financial elites have heavily influenced the
curriculum taught at leading American educational institutions for decades now.
For example, over the last century, the Rockefeller family has donated millions
upon millions of dollars to leading economic schools such as the University of
Chicago and Harvard Business School. Perhaps it is the monetary influence of
financial elites such as the Rockefellers that is largely responsible for
erroneous economic beliefs about inflation and our monetary system that persist
today. To squelch much of the skepticism that may arise around the suggestion
that the financial elites would utilize their money to alter the educational
curriculum of leading educational institutions in America, recall that in 2002,
David Rockefeller stated in his own autobiographical memoirs the following:

“For more than a century ideological extremists at either
end of the political spectrum have seized upon well-publicized incidents such
as my encounter with Castro to attack the Rockefeller family for the inordinate
influence they claim we wield over American political and economic institutions.
Some even believe we are part of a secret cabal working against the best
interests of the United States, characterizing my family and me as
"internationalists" and of conspiring with others around the world to
build a more integrated global political and economic structure - one world, if
you will. If that's the charge, I stand guilty, and I am proud of it."

The only difference today is that the cabal working against
the best interests of the US and all American families is no longer secret, but
well documented and well known. Since
the above statement is sure to stir up cries of conspiracy regardless of the
fact that it is directly attributable to a member of the financial oligarchy,
let us take a minute to consider the disappearance of our critical thinking
skills. Why do those with a keen interest in suppressing the truth about the
origins and nature of our current global financial crisis have great success in
doing so merely by simply using the word “conspiracy” to marginalize the
well-constructed arguments of others? Why do the people that attempt to
discredit these truthful revelations never offer more than flimsy verbal
accusations devoid of any evidence to validate their accusations? And why do we rarely, if ever,
challenge the fact that the vast preponderance of people that provide the
strongest opposition to the dissemination of truth are those whose personal
wealth depend upon delusional beliefs about the health of our stock markets and
the soundness of our financial institutions and monetary system? Today, the fraud of our institutional education system has dulled our aptitude of
critical thinking to such a degree that we now look to others to do our
thinking for us. Instead of challenging the propaganda that makes zero sense, we are all too willing to be duped into believing
erroneous concepts just because they are written in a textbook or a newspaper.

As a prime example of this, consider over the past decade, the
propensity of Central Banks and the IMF to pre-announce massive gold sales that
they rarely execute. From a purely logical standpoint, can anyone well versed
in logic truly argue one beneficial reason for doing so? In 1999, when now UK Prime Minister
pre-announced the sale of 400 tonnes, or more than half of the Bank of
England’s gold reserves, his announcement promptly caused gold to plummet to
$250 an ounce, the lowest price in the last decade. For an institution
interested in making profits, it is a foregone conclusion that pre-announced
large sales of gold reserves will significantly depress prices; thus what is
the reason behind such an announcement other than to purposefully depress
prices? Yet, when skeptics are presented with such evidence and can offer no
valid counter-argument, instead of intelligently considering the validity of
another’s viewpoint, too often they shut off their brains and repeat beliefs
that have been repeatedly rammed down their throats.

In the seminal book about warfare, The Book of Five Rings,
legendary samurai Miyamoto Musashi wrote, “true enlightenment can be seen by
what a person has done, not by what he says. Those who have missed the mark may
chatter all day long about this and that, but they have never done anything.
Anyone can make a good argument, but few can show good results.” If we as Americans wish to prevent the
death of capitalism and to reinstitute our rights of self-determination and our
Constitutional rights to a sound monetary system that are paramount to a free
society, we must judge people not by what they say but by what they do. We must
listen not to those that present hollow arguments and that can demonstrate no
positive track record of results, but rather focus on the thoughtful arguments
of the few that have been able to illustrate the intelligence and validity of
their views because their predictions have been vetted over time.

As a nation, we have become Enronized because we too often
focus on the false arguments of those that are well versed in the art of
persuasion yet persistently demonstrate a poor track record when it comes to
results. As a prime example,
consider this Congressional testimony where former US Treasury Secretary Hank
Paulson disingenuously claims that he advocates greater transparency in US
markets when in fact, Goldman Sachs, under his direct leadership, aggressively
lobbied to repeal laws that granted financial markets transparency. We are much
too apt to accept the words of people rather than to take the more intelligent
approach of analyzing their actions to judge the validity of their words.

The Fraud of Our Leaders

The final phase of the Enronization of America has occurred
through our power structure and politics. The financial oligarchs that wish to
suppress the truth about their role in this crisis have been very opportunistic
in forming close relationships with the highest echelons of government and then
using this inordinate power to polarize the masses and further consolidate
their power. The revolving door
among Central Banks (i.e the Bank of Italy, the Bank of England, the US Federal
Reserve), Goldman Sachs, the US Treasury, JP Morgan, and Citigroup has been
well documented so I won’t repeat
the prolific work of others here. However, using politics or nationalism as a
divisive maneuver is often a favored tactic of the financial elites, so we must
remain vigilant against immoral attempts to deflect our attention away from the
true causes of this crisis, such as the scapegoating of immigrants or other
shameless tactics. In a recent outlook for 2010 that I sent to my paying subscribers, I stated:

"Though bankers and politicians tried to sell 2009 as a year of recovery, this is nothing more than massive deception of the worst kind and hot air. What they delivered to you was not recovery but a big deception."

I further stated:

If the S&P 500 breaks the support level [of 1126-1128] and remains below it for several days or heavily breaks below it on a single day [on higher volume], then look for a downtrend reversal pattern to follow."

The above indeed happened and triggered a two-day, 4%+ slide in the S&P 500 last week. I've informed my subscribers of the other indicators they must follow to know if this is just a correction or the beginning of a long-term slide. However, with such rampant fraud in all major stock markets last year perpetrated by politicians and bankers, a big crash is inevitable in the world's major stock markets and is a matter of "when" and not "if". It's a little early to determine if what happened at the end of last week is the beginning of a long-term slide though initial appearances seem to project that right now. A long-term slide will manifest in time, whether now or later. When obfuscation of fact and misinformation systemically
replace transparency and integrity as they have in our modern society, we have
little chance of producing a favorable outcome to this current crisis. More
than 140 US banks failed in 2009, and every single bank failure announcement occurred
on a Friday afternoon after market close so that the revelations of these bank
failures could not adversely affect markets while they were still open.
Additionally, such announcements were timed to grant investors two weekend days
to forget about these failures. America has been Enronized over the past
several decades not because of Democrats and not because of Republicans, but
because of the financial oligarchs that have ruled and continue to rule our
country. The Enronization of America has happened under President Clinton’s
watch, under President Bush’s watch and it is now progressing under President Obama’s
watch. If you think there has been
a marked difference in monetary and fiscal policy in America during the last 20
years, then you do not truly understund our monetary and fiscal policy.

It amazes me that people still foolishly follow the words of
this administration and not its actions. It amazes me that I still hear people
praising Obama’s proposed plan (proposed being the key word here) to impose
limits on the size and trading activities of the nation's largest banks without
awaiting the resultant actions from such talk. I read one financial journalist
that stated high praise for this proposal as he inferred that banks have become
too big and that a freeze on mergers and acquisitions in the US banking
industry would be welcomed. Did this journalist even consider that the biggest
consolidation of power on Wall Street in the last couple of decades just
happened within the past two years when Goldman Sachs and JP Morgan virtually
eliminated all of their competition and the US Federal Reserve utilized the
very crisis they created to seize even more power? Did this journalist even
pause to consider that this administration’s cabinet and advisory boards
consist of more Wall Street executives than any administration in the last
several decades? Did this journalist consider that the greatest theft of
American taxpayer money occurred under this adminstration’s watch with the $850
billion bailout plan that is now morphing into trillions of dollars? Did this
journalist bother to note that the Senate Finance Committee is now seeking to
increase the debt ceiling by a radical $1.9 trillion after just approving a
$290 billion increase at the end of last year that was necessary to avoid an
unprecedented default on US Treasury bonds? And did this journalist miss the
CFTC hearings regarding the imposition of position limits on energy commodities
and somehow miss that the true nature of discourse during these hearings was
not to ban speculators from creating and bursting bubbles in the commodity
markets but only to ensure, in a round-about-manner, that Wall Street can
continue this speculation?

And after all this, if this journalist still believes
Obama’s comical statement that “the financial system is far stronger today than
it was one year ago”, this is exactly what is wrong with our media today. Because the deceit, lies and the shady
accounting practices that cover up the true health of all banks in the Western
hemisphere are far stronger today than they were a year ago, the people’s
confidence in the US financial industry may be much stronger today than it was
a year ago. But confidence and reality are two different animals, especially in
today’s chaotic world. If true Glass-Steagall like reforms are indeed
implemented, then I will be the first to commend this administration for acting
differently than any administration in recent history when it comes to reining
in financial greed and fraud. Furthermore, I am much too familiar with the
political game of very public tough talk that often is granted the greatest
media publicity that eventually morphs into a greatly watered down, very
different-looking piece of legislation that somehow escapes the critical lens
of the media. So forgive me if I always reserve my judgment regarding such
tough talk until I see the final iteration of the legislation that passes into
law. My skepticism of this process originates from the fact that administrations
have spoken the same tough game in public for decades while continuing to sleep
with the enemy behind closed doors.

Until we wake up and correct many of the flaws in our thinking
and in our justice system, capitalism has zero chance of survival and any
discussion of reviving free markets is moot. Arthur Shopenhauer, a noted German
philosopher, once stated,

“All truth passes through three stages. First, it is ridiculed. Second, it is
violently opposed. Third, it is accepted as being self-evident.”

We have already passed through the
first stage where truth has been ridiculed. For several decades, those that
attempted to reveal the price suppressions schemes executed by governments and
Central Bankers against gold and silver were ridiculed as conspiracy loonies.
Today, the evidence of this manipulation is so overwhelming that men that dwell
firmly inside the confines of the mainstream, men that previously would never
have dared to publicly state such sentiments just 10 years ago, are now
stepping forward and publicly acknowledging the existence of price suppression
schemes that interfere with free markets (i.e., Donald Coxe, chairman of Harris
Investment Management in Chicago).

Today we have progressed to the second stage of truth, when
truth is violently opposed. Former US Treasury Secretary Hank Paulson testified
multiple times in Congress that it is not reality that is important to stock
markets, but only what people think they know, even if what they think is
wrong. Paulson regularly emphasized the vital importance of consumer confidence
to the performance of capital markets.
In the end, confidence levels measure consensus belief and often have
very little correlation to the reality of underlying economic fundamentals. In
a bear market, such as the one in which we are currently engaged, it is safe to
say that rising stock markets serve as a barometer of deceit. The greater the
deceit by our leaders, the more likely stock markets will act irrationally and
rise when there is no foundation to support the rise, including the most recent
rally that we have witnessed in US markets throughout the latter half of 2009
into the very beginning of 2010. But when reality overcomes deceit, watch out
below, because we will not see a correction, but a crash.

As long as markets react positively to lies that prevent the
masses from understanding the grave situations of our faltering economy and
monetary system, our government and financial leaders will continue to prevent
people from knowing or understanding the truth. One merely has to acknowledge
that last year, FASB conveniently altered mark to market regulations
immediately prior to first quarter 2009 earnings season and immediately prior
to stress tests that were to be conducted on financial institutions to realize
that our current administration is not any more interested in disclosing the
truth or increasing transparency than previous administrations. Again, we would
be wise to remember Miyamoto’s sage advice to judge someone not by his or her
words, but by his or her actions.

The fragility of America’s emotional state regarding the
dire economic situations that existed during the last US Presidential campaign
left America vulnerable to blindly accepting anybody that promised change, but
again we must consider the actions, not the words, of this current
administration. We must look at
the men appointed to “solve” this crisis and understand that almost all of
these men were handpicked from the same institutions (Citigroup, Goldman Sachs,
and JP Morgan) that were largely responsible for creating this crisis. The most
efficient way to solve a crisis caused by lack of ethics and morals is not to
put the most morally bankrupt people in the nation in charge. It should disturb
us all that our current President appointed a man like Paul Volcker to lead a Presidential
advisory board when Volcker once stated in reference to rising gold prices in
the 1980’s the following:

“That day, the U.S. announced that the dollar would be
devalued by 10%. By switching the yen to a floating exchange rate, the Japanese
currency appreciated, and a sufficient realignment in exchange rates was
realized. Joint intervention in gold sales to prevent a steep rise in the price
of gold, however, was not undertaken. That was a mistake.”(Source: Volcker’s
memoirs printed in the Nikkei Weekly, November 15, 2004).

Men that clearly state their opposition to free market
mechanisms and the reliance on collusion as preferable to transparency and
integrity should never be appointed to any position of leadership in our
country. Despite the lack of
leadership from the financial elites during this crisis, they have made it
clear that their agenda of concealing the truth from us will not prevent them
from shamelessly pinning us with the blame for their errors by increasing our
taxes and devaluing the purchasing power of our dollars. And remember,
devaluing major currencies, which no sane person can deny is happening all
around the world, is the quickest way to destroy capitalism. It is for this
reason that bankers are currently digging capitalism a shallow grave right now.

Though our governments have aided and abetted our global
financial crisis which will soon enter its second phase, they have not been the
root cause or the prime perpetrators. This honor belongs to the financial
oligarchs and the fraudulent monetary system they have instituted. Today,
governments have devolved into nothing more than an instrument of execution for
the financial oligarchs. The late great John F. Kennedy was the last US
President to understand and recognize the massive flaws and immorality of our
modern day monetary system. Were the honorable President Kennedy still alive
today, but a regular citizen, voicing the exact same displeasures against our
current monetary system as he did half-a-century ago, I have little doubt that
those in power would have already marginalized his arguments and labeled him as
a “conspiracy buff” with a lack of sensibilities.

Can We Save Capitalism?

The lack of transparency and the veil of secrecy that has existed
in our financial world for a very long time now have enabled the imminent death
of capitalism. Just think about some of the parlance that now is commonplace in
our global marketplaces like “dark pools”, where discovery of market prices has
become opaque and difficult, yet grotesquely accepted as normal. Furthermore,
the misinformation campaigns that the financial elite have engaged upon for
decades have further supported and maintained the ignorance of the masses. If
one merely focuses on gold and silver markets, one can uncover a mountain of
deceit. Consider that when Central
Banks lease gold, they still claim it as an asset on their balance sheets, an obviously
fraudulent practice.

In the end, let us not look to the words of our financial
and government leaders for truth, but to their actions. If there has ever been
another institution in the history of America with a persistently worse track
record of accomplishing their stated mission than the US Federal Reserve (that
of maintaining price stability), I cannot think of one. Thus, we should
permanently shutter institutions that have a track record of utter failure and
that have consistently failed to act in the interests of their citizens
although they may repeatedly insist that they always act in the nation’s best
interest. We should all want
results and supporting actions, not unfulfilled pledges and promises year after
year, and decade after decade. Enough is enough. We should also permanently
shutter those financial institutions led by corrupt executives that have
cumulatively made billions from the purposeful deception and bankrupting of
American families. Finally, if you
are a shareholder with voting rights, it is incumbent upon you to exercise your
rights at general meetings to oust all corrupt directors and executives at
corrupt firms. Because it is near impossible to regulate morality, the only
sustainable solution to prevent the death of capitalism is to remove the very
institutions and people responsible for this process. As current administrations
of major governments all around the world have demonstrated an unwillingness to
do so, it is patently clear that this movement must originate from the people.

If we all desire the freedom of self-determination that is
impossible with a corrupt monetary system, this change will have to come from
the people. If there is one thing about the monetary system that I believe with
all my heart, it is this. The monetary system today, as it has been structured
by Central Bankers, is immoral. The current monetary system stifles, not
encourages free markets. If a free market system facilitated capitalism in the
world’s major markets today, the middle class would be healthy and robust, the
poor would be transitioning into the middle class, and the rich, while still a
healthy component of society, would not increase their proportion of wealth
relative to everyone else every year. Instead, in the absence of free markets
and capitalism, the rich seize more and more resources every year, the middle
class shrinks every year, and the poor become poorer. If every person in this
world truly understood how the monetary system operates, whether a Muslim, a
Christian, a Hindu, Buddhist, a Catholic, or of any other faith, I am 100% sure
that that person would be opposed to our current monetary system based upon his
sense of morality provided by the most important tenets of his or her religion.
In The Economic Consequences of the Peace, John Maynard Keynes stated the
following:

“Lenin is said to have declared that the best way to destroy
the Capitalist System was to debauch the currency. By a continuing process of
inflation, governments can confiscate, secretly and unobserved, an important
part of the wealth of their citizens. There is no subtler, no surer means of
overturning the existing basis of society than to debauch the currency. The
process engages all the hidden forces of economic law on the side of
destruction, and does it in a manner which not one man in a million is able to
diagnose.”

If you don’t
understand the above statement, then I urge you to research Central Banks and
how they operate until you do. And when you do, you will understand why I claim
that no man or woman that calls himself a good Christian, a good Muslim, a good
Catholic, or a good Hindu could support our monetary system or work for a bank
today in good conscience. If you are skeptical of this comment, as you should
be, then I urge you to investigate and understand how the monetary system truly
operates before you declare your opposition to this statement. Try to explain
in words, to another friend, the complete process of how money comes into
existence from the first step of being printed by Central Banks until it ends
up in your wallet, along with every party that is charged interest or taxed along the
way during this process (through multiple mechanisms) including the government and the government’s transfer
of this “interest tax” to the people.
Until you can verbalize every step of this entire process, one should not claim that he or she
understands our monetary system. But when you can verbalize this entire process, it will
become very clear to you why Lenin stated that the best way to destroy
Capitalism is to destroy the purchasing power of money. You will understand the
extreme hypocrisy of Goldman Sach’s CEO Lloyd Blankfein’s statement that
bankers were doing “God’s work” when you realize that our modern monetary
system breaks the 8th commandment of “Thou shall not steal.” Furthermore, you
will understand that while Goldman Sachs undoubtedly deserved the bulk of
criticism levied against it last year, private banking families that
established Central Banks, not Goldman Sachs, have created our fraudulent monetary system.
As is the case with other large commercial banks, Goldman Sachs is just an enabler, participant and beneficiary of the corrupt system.

If we all desire free gold and silver markets that are not
persistently rigged by the US Treasury, the US Federal Reserve, the Bank of
England and the likely usual suspects Goldman Sachs, HSBC, and JP Morgan, then this
change will have to come from the people. If we desire free markets of any
kind, in any form, this change will have to come from the people. Too many
times in the past decade, politicians have promised change only in word but no
real change has ever resulted from their actions. This clearly demonstrates
that the financial oligarchs are the real power backing all major governments
today. The alternative consequence
of our inaction will be the manifestation of Shopenhauer’s third stage of
“truth as self-evident” at a not-so-distant time in the future. Unfortunately,
however, if truth becomes self-evident, this will undoubtedly mean that the
bankers will have succeeded in transforming the middle class of many Western
nations into the poor. In reality, if we enter the third stage of monetary
truth when truth becomes self-evident, it will be too late for most to take any
action that will have any consequence in assisting their families. The time for action clearly is now –
when we are still in Shopenhauer’s second stage of truth – the stage when all truth is violently
opposed. Two movements that provide actionable ideas to implement right now
that will help reinstate capitalism and revive capitalism from its deathbed can
be found at Move Your Money and Sound Money Now! Instead of just complaining
that our lives are being ruined by bankers, all of us would do well to take countermeasures
today in an attempt to save capitalism.

JS Kim is the Managing Director and Chief Investment
Strategist for SmartKnowledgeU, LLC, a fiercely independent investment
education, research, and consulting firm that provides visionary guidance and
profitable strategies to deal with the ongoing systemic fraud of our monetary
system and capital markets.

- advertisements -

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Fri, 02/19/2010 - 12:48 | 237650 the.spear

There is another possibility that I note Mr JS Kim doesn't acknowledge in this very fine piece. Perhaps there is a system that is better than our current one (even when free markets are functioning fairly and without intervention). It might be that the advent of the truth of our social-economic system becoming self-evident will bring forth the necessary crisis that gives birth to a better, improved system of social co-existence.

Tue, 01/26/2010 - 16:58 | 206753 Anonymous

Anyone here seen Zeitgeist lately? Saw it for the first time a week ago, and couldn't help but smile after reading this. Rock on, good people.

ThatGreekGuy.

Fri, 02/19/2010 - 12:39 | 237639 the.spear

don't forget Zeitgeist Addendum also.

Mon, 01/25/2010 - 21:59 | 205989 Hammer59

I agree. This is the best article on ZH that I've ever read. Tragic that only 1500 read it vs. 8500 that read Madhedgie's Nenner article.

The issue here is FRAUD! We know life is not fair, human nature is corrupt, blah, blah, blah... But the rule of law should be obeyed, and transgressors must be punished. Enron--tragic example, but as close to justice as capitalism ever gets. Madoff? Cakewalk. Did anyone at the SEC lose their cushy jobs? Even though they deserved to?

We may be able to overcome the pervasiveness of fraud if we can find a political option to the entrenched two party system that has proven itself to be worthless to us. MSM will follow the newspapers and network television into obsolesence given time.

Unless we have accountability---meaning firing, imprisonment, wealth confiscation etc. for wrong doing, we will not be able to deter fraud. If what we have seen for the last 20-30 years is indeed "Capitalism"--where 5% of the populace controls 80% of the wealth, it is not worth saving--and needs to be destroyed via revolution.

Mon, 01/25/2010 - 15:54 | 205598 the.spear

I know a lot of readers have shared this but I truly believe that this is the best article I've ever read on ZH.

Thank you sir.

Mon, 01/25/2010 - 15:26 | 205574 Anonymous

Some very good points! Thanks.
What’s wrong with Economics?

Mon, 01/25/2010 - 12:44 | 205327 RSDallas

I have read a lot about all of this in the last year and I'm still a bit torn on a few issues:

Is everyone that writes about this stuff really just a bunch of jealous people that haven't been able to build their own wealth during their lifetime or are they really smart and understand that a large percentage of the public always looks to BLAME someone or something else for their failures?

Does everyone in society practice capitalism? No, only a few. The rest of the population works for the capitalist. The reason for this is that approximately only 1% of our population is capable of managing themselves. But most EVERYONE wants to be wealthy.

People want, desire, wish for wealth, but 99% are not willing to sacrifice what is necessary to build wealth let alone posses the intellect required to build wealth.

People do however posses the necessary skills to blame someone or something else for their failures in life!

Now, is our capitalist system corrupt? Is their unfair collusion in the system? Yes, probably, to some degree. Are "the people" going to change this? No! We will never have a "Utopian" business environment wherein everyone has an equal chance and everyone always plays by the rules. I'm sorry but it just won't ever happen anywhere or anytime in our present world. Can we strive for honest business dealings? YES, by all means!

Capitalism, in my opinion, is as healthy and strong today as it was when the Morgan’s, Rothschild’s, Hilton’s, Ford’s and whomever else you would like to put on the list. So what should we fear?

We should fear that people like you grow in your numbers and in your ability to convince the general public that they don't have a chance in life and that everything is rigged! People, somewhere along the way, thanks to people like you and our elected officials, have forgotten about the “law of the jungle” and that law is the "survival of the fittest, eat or be eaten"! This law exists and always will. I’m not proposing that you achieve your bounty in an unlawful manner.

It seems to me that we should be concentrating our efforts in rallying the "people" to get off their asses and vote this entire administration out of office because it is CLEAR that they have been making very STUPID and mis-guided decisions over the last 20 years. We "the people" have basically elected and continue to elect a bunch of dumb asses! The only collusion that has occurred is the collusion of the "people" to loose sight of the importance of who is elected into our Nations government.

Just quit crying so damn much and get out there and make it happen instead of complaining why we can’t make it happen. Needless to say, I’m kind of leaning against the conspiracy theorists.

Mon, 01/25/2010 - 15:54 | 205597 jbcorwin

+1, I think about this often along with the OP's statement.

For fun: http://tinyurl.com/yhjo2u4

Beyond that: http://tinyurl.com/ybuhtmj

Mon, 01/25/2010 - 12:42 | 205324 Anonymous

This is an excellent article and should be published repeatedly in other places. More people, like myself
need to know what is going on, behing the scenes,
with their money.

Would you consider publishing this on facebook,myspace and other online medias.

Thu, 02/18/2010 - 12:32 | 235506 smartknowledgeu

I'll go ahead and publish it on some online social media sites but feel free to reprint the article yourself as well on any social media/networking sites you are a member of as well. Cheers.

Mon, 01/25/2010 - 12:27 | 205299 Anonymous

I have read a lot about all of this in the last year and I'm still a bit torn on a few issues:

People want, desire, wish for wealth, but 99% are not willing to sacrifice what is necessary to build wealth let alone posses the intellect required to build wealth.

People do however posses the necessary skills to blame someone or something else for their failures in life!

We should fear that people like you grow in your numbers and in your ability to convince the general public that they don't have a chance in life and that everything is rigged! People, somewhere along the way, thanks to people like you and our elected officials, have forgotten about the “law of the jungle” and that law is the survival of the fittest, eat or be eaten! This law exists and always will. I’m not proposing that you achieve your bounty in an unlawful manner.

Just quit crying so damn much and get out there and make it happen instead of complaining why you can’t make it happen. Needless to say, I’m kind of leaning against the conspiracy theorists.

Mon, 01/25/2010 - 11:58 | 205269 JacksWastedLife

“All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.”

However, with such rampant fraud in all major stock markets last year perpetrated by politicians and bankers, a big crash is inevitable in the world's major stock markets and is a matter of "when" and not "if".

Google, McDonalds, Wal-Mart - righ now?

Mon, 01/25/2010 - 11:39 | 205250 S474NtheD3v1L

R.I.P Democracy / R.I.P. Capitalism / R.I.P. Truth / R.I.P. Accountability

I could go on all day. . .

Mon, 01/25/2010 - 10:34 | 205203 BigBagHolder

I agree with your focus on the middle class... but your treatise on "how" this problem is created is a fantasy.

The middle class needs:

- lower tax rates
- national healthcare

These two things are the structural elements which work against the manufacturing base / middle class of America. The tax-cuts we have seen since the 1980s have been predominantly for the rich. Why are "capital gains" 15% and yet we tax some 15-y.o. kid 20-30% on his income? The culprit here is the FICA tax which is 12.4% on all income up to 100k. What?

Then healthcare is the second key. Bc most other countries in the world have socialized healthcare costs, their middle and lower-end worked are far more competitive globally. The american worker is very productive, but not enough to overcome 20-30% extra total costs in healthcare.

Two simple things. Could be changed tommorrow.

Mon, 01/25/2010 - 12:54 | 205343 Busy-Body

We do not need nationalized healthcare - we do not need nationalized anything. Were we to fix the problem further up the "food chain" (see recommendations by me in a post above), the health care problem (I concur it is a problem) would be corrected fairly quickly. Lastly, socialized healthcare is not, in and of itself, the sole (nor primary) determinant for competitive global trade.

P.S. Agree with lower taxes (again refer to my post above)

Mon, 01/25/2010 - 10:15 | 205191 rapier

What does having a much smaller middle class and much larger underclass have to do with the end of Capitalism. Such are the natural results of Capitalism. Without powerful elements of regulation and taxation and redistribution the top 10% or so will control 90% of all assets in a free market. By free market I mean that the elites are in full partnership with government to press and codify their position.

Capitalism is not being destroyed it is being perfected. Now many have a sort of tic or fetish for individualism but individualism has nothing to do with capitalism. It is when people organize into self interested groups, through corporations, that capitalism thrives.

It should be noted that being against government is at its foundation based upon opposition to nations. The nation state is what stands in the way of capitalism at every turn. The free market knows no state. One can be a patriot or one can be a capitalist but one cannot be both.

I think it is safe to say that citizen patriots can be well controled to support the corporations but the wild card is the military. Eventually the military is going to totally dominate the state but the corporations are going to have to work our some agreement with militarist government and that isn't going to be easy.

Mon, 01/25/2010 - 09:58 | 205187 twotraps

Here's an idea...why don't they start taking all kinds of money out of our paychecks...like for cars or food....you know......like the Insurance companies do! That way the corporations are sure to get more cash, the govt can tax it, and ultimately tell us how to spend it....I mean guide us as to where, when, how much we can spend.

Mon, 01/25/2010 - 09:42 | 205179 Gimp

Cat you are correct - the Supreme Court has just brought a new meaning to the phrase "bought and paid for politician".

Mon, 01/25/2010 - 09:34 | 205176 Cheshire.Cat

The banks may be destroying capitalism; but the Supreme Court just gave it the coups de grace. With their decision, they have put the money pools in industry management and unions firmly in control of the election advertising. The sheeple will respond exactly as one would expect.

Mon, 01/25/2010 - 09:24 | 205171 10044

Fantastic piece, as always... Than you sir.
One note on the SEC, they did not ignore the warnings, they were simply in it with Madoff along with the CIA and the Mossad. The truth WILL come out and prevail and those responsible will be brought to justice. Remember, last time it happened, 300,000 heads rolled down the streets of Paris.

Mon, 01/25/2010 - 09:19 | 205169 Ruth

Very nice article, I have been extremely impressed by your knowledge ever since I found your article in 09/08....thank you for contributing here.

http://seekingalpha.com/article/95496-law-of-supply-demand-is-dead-for-gold-silver?source=side_bar_editors_picks

Mon, 01/25/2010 - 09:07 | 205163 Leo Kolivakis

Capitalists are destroying capitalism, much like Marxists-Leninists destroyed communism. Unless we change the rampant fraud and abuse at the top of the social hierarchy, we are heading into the abyss, and real quickly.

Mon, 01/25/2010 - 08:38 | 205150 exportbank

Mug my mother and steal $50- you're a criminal. Clean out her pension and her bank account with a signature - you're a hero.

Mon, 01/25/2010 - 07:18 | 205139 waterdog

The problem with government? do the math

Massachusetts voting age population 5,068,414

Brown 1,168,107

Caokley 1,058,682

Kennedy 22,237

Total voted 2,249,026

Total that did not vote but could have 2,819,388

Mon, 01/25/2010 - 13:46 | 205438 crzyhun

BINGO. This is it!! A nation that does not know history will be easly led. Yes- I know the victors write it, still the point is that the truth will set us, me, thee free.
Even in statist/communist russia, etc., there was descent, you ended in the prisons, yet the marginal effort added up over time. Or. you were executed/killed. Freedom has a cost and a price.

Mon, 01/25/2010 - 07:03 | 205138 Handle with care

The fundamental issue here is the constant battle between the rentier class and everyone else.

The fact that over the last 30 years 80% of all the benefits of economic growth have goner to the top 5% shows that this group has been winning.

The rentier class wish to extract money from the masses simply for existing. Various rebellions over the centuries and the rise of democracy as a method of keeping the masses appeased has led to a situation where they invited the masses into serfdom by having them permanently indebted so that instead of having a law saying that a certain proportion of your labor had to be handed to your local Lord, you now sign up to pay that over via interest payments.

Now that the masses have run out of income on which to support more borrowing the rentier class has the government borrow on your behalf and then it can extract your money at the end of a gun in order to pay interest to those who own the debt.

Historically, there is a pattern to this. As the rentier class rises in wealth in power it is able to extract more of the income of the masses which leads to them owning even more of the income of the masses leading to more and more power and money to the rentier class and so on.

The reason we don't permanently live in an aristocratic serfdom is due to black swan events that reset the relationship between the power of capital and labor. Some are obviously results of the excessive size causing a degree of impoverishment of the masses that they revolt, such as the French revolution which led to the aristocracies in every other European nation giving back power and wealth in order to save their own necks and influencing the philosophy of the Founding Fathers. Sometimes its an event such losing a war and being invaded, or a natural disaster or plague such as the Black Death making labor scarce and thus more valuable throughout Europe.

Looking at the US its obvious now that there is a class of elites sitting at the top of US society that extracts so much of the income of the nation that it prevents any increase in prosperity for the rest of the people. This is its terminal phase.

How will it end? The US is unlikely to be successfully invaded, its unlikely that a natural disaster will affect the entire nation so the only result of the current accelerating trajectory is revolution.

At what point this occurs is variable. Some population revolt at lower levels of exploitation than others. The US was founded on the basis of being a people that would accept very low levels of exploitation by the elite. Whether the people today have the same spirit as there forefathers determines when the revolution will occur. In my mind, the 'if' is not inevitable. Its one of the defining characteristics of the UK aristocracy that it has the ability to constantly alter its balance of power with the masses to stave of revolution and preserve its own existence. The US aristocracy is likely to be even more clever as its not generally afflicted with the same level of contempt for the masses as marked doomed aristocracies such as in France and Russia.

So we could see the situation where the elite get richer and richer and leave to the masses just enough power and money to stop them revolting, going on for centuries more.

On the other they could get it wrong and get too greedy and spark a new American Revolution

Mon, 01/25/2010 - 06:03 | 205131 Anonymous

An excellent article which might be read from different perspectives.
Very representative of a stream of articles whose aim is to cater to a segment of population, not to deliver information.

The death of capitalism? Nothing less than that. Of course, in the doing, no definition of capitalism is provided so people can check the death by themselves. Save maybe an implicit defintion that capitalism is the process that produced US middle class.
So if the US middle class can no longer be supported, the direct consequence is that capitalism is dead. The target to pander to is here elected.

Article peppered with a few self serving references, with the usual suspects as guest stars: the bankers are the ones who are about to kill Capitalism.

Reading this kind of articles, I understand bankers hiring bodyguards as they might feel that a sizeable dose of mob spirit can anytime be unleashed against them.

Yet the underlying issue is simple: since the inception of the US, some actions have been regularly taken. Some have been on the delivering side (the profitable side), others have been on the receiving side (the losing side)

Suddenly switching from the benefitial side to the detrimental side does not mean the death of the process.

It is not because up to a day, you are on the killer side in a war that you getting killed means death of war.

Mon, 01/25/2010 - 07:53 | 205124 Jefferson

Excellent article. Fantastic prose.

It would be interesting to read the author's specific analysis of the current efforts by the financial oligarchs particularly Volcker to exploit the global financial crisis and institute a centrally planned world economy.

Mon, 01/25/2010 - 04:18 | 205118 Anonymous

The financial elite's stripping of national assets is very close to the root of the problem , but it isn't the root. Something called The Hidden Evil is. Think of it as the sum of the dark side of human nature, and the psychopathic elite who have figured out how to exploit it.

Currently, a dictatorship is being installed in the US and most NATO nations. There is a roundup occurring. People who might be inclined to resist the dictatorship are being identified (thanks in part to the NSA/CIA's favorite honeypot, the Internet) and eliminated, covertly. The tactics used are similar to those used in East Germany and by the FBI in COINTELPRO.

You want to know why nobody's fighting this? Because the people who are willing to fight are being murdered in broad daylight and our stories are so incredible (by design) that nobody believes us.

http://areyoutargeted.com/welcome/

Also check out the Hidden Evil web site:

http://thehiddenevil.com/

Mon, 01/25/2010 - 01:51 | 205073 Anonymous

O no, please...religion...

Mon, 01/25/2010 - 01:15 | 205054 Anonymous

Far and away the single best article Ive ever read on ZH. Excellent work.

Mon, 01/25/2010 - 00:53 | 205041 Anonymous

You state that a good Christian, Muslim, Catholic or Hindu could not work for a modern bank. Are you implying that a Catholic is not a Christian? Are you implying that modern banking practices would not offend the conscience of a Jew? You seem to be a careful writer, so I am assuming what you have written has implications and is not simple sloppiness.

Mon, 01/25/2010 - 02:04 | 205027 bc0203

Hm. Ok.

While I'm sure you have the necessary facts to back up your arguments, the lack of cross references and documentation in your posting makes you come across as a conspiracy-theorist. Might want to fix that.

I'm going to start with some pretty negative assumptions about human nature, which have been validated several times over the centuries:

Politicians will do/say whatever is required to obtain and maintiain power/influence.
Businesspeople (including bankers) will ultimately do it takes to do to keep their business afloat, while providing their products/services at a profit. This includes influencing politicians as required.
The general populace (especially an uneducated one) won't notice/complain/riot if a "good" standard of living is maintained.

So, assuming that this is the mindset of the three groups of people above, how do you break through the denial quickly and effectively, before the system is mortally wounded?

If you're really serious about "fixing things," I would suggest stealing a page from the IMF's playbook. Unfortunately, you'll need a major fiscal or political crisis to get the ball rolling - I'll leave that part to you:

Break the denial of the politicans - get them to understand that there will be no country left to govern if the oligarchs continue to bleed them dry
Get the banks (and the Fed) to open up their books and expose their toxic assets to the light of day
Resolve/break up insolvent instituions.
Deal with underlying sovereign debt and currency issues (i.e. revaluation/replacement).
Allow markets to reset themselves to realistic prices.
Fix the legislation that allowed system to get this out-of-whack in the first place. Hopefully, after going through the experience above, politicans will have no desire to re-live it any time soon.

IMHO, the best you can hope for under these circumstances with the currency/national debt is a reorganization where everything resets itself quickly. That would be the best way to deal with the issues of maintaining social order and preventing a protracted period of hyperinflation, as well as overall confusion in the markets.

Oh, and the general populace? I didn't mention them in the above because they're already screwed, they just don't know it yet.

Yours in sunshine and rainbows...

Mon, 01/25/2010 - 12:19 | 205288 Anonymous

Intriguing post. I noticed that many people draw conclusions from specific fields to generalize on human nature.

I observed that people of power have two objectives in order of priority: the first is to maintain themselves in power, the second is to get into power.

How do you draw a conclusion on human nature? As far as I know, politicians are people of power and people who chose to become politicians. Being a politician is still a well rewarding enough position so you can get people struggle to become one and not being compelled into it.

So how can you draw your conclusion on human nature? All people, including people with the required skills, do not choose to become politicians. The whole stuff is flawed, the only conclusion you can draw is on people of power, not human nature.

The general populace: the more educated they are, the more likely they are to enjoy a good standard of living. The well educated are the ones who are drawed into siding with the machine as long as it benefits them.

Etc

Mon, 01/25/2010 - 16:10 | 205528 bc0203

Valid points, all, and actually it's an extension of what I was trying to say originally. Everyone is in this from the perspective of what's their own self interest, not what's in their enlightened self-interest.

For instance, whether you say that "they" intentionally dumbed-down our children, or that the teacher's unions did it via makging standards lax because they didn't want to be held to a higher standard, it doesn't matter - the damage has been done, and (for instance), reading is at sixth grade level, on average. That's what you're working with.

So I guess you could say I look at the current situation as one where the oligarchs and/or the other sovereign lenders are the drug dealers and debt is the drug. And like any situation where you're dealing with an addict in denial, the first thing we have to do is get the addict away from the dealer, then get them to detox, then make an honest assessment of where we things are. After that you can take the necessary steps to rebuild, including creation of rules that keep the drug dealers out of the neighborhood.

Right now, the addict is too afraid to stop using, and the dealer network is firmly under the control of the dealer, both addicted to the drug themselves and using the drug to manipulate their customers. Until there is a serious disruption to the drug supply, there won't be any changes to the status quo.

My original post lays out what I think we should do if there's a serious disruption to the drug (debt) supply. It basically amounts to pulling the rug out from under the drug dealer. Yes, the level of disruption it would cause to the addict would be monstrous, and the level of discpline required to stay "clean" would be tremendous. And yes, when resetting the currency, I'd love to see a gold (or silver) standard. But I'm being pragmatic here; it might take a few "brick walls" before the drugs are fully cleared the addict's brain and they are thinking clearly enough to realize they need to stay out of the drug dealer's neighborhood if they want to stay clean.

Unfortunately, on a global scale, I see things heading the other direction. The creation of SDRs and other movement towards a global currency does not bode well for the future of the addict. There will be fewer checks and balances, and ultimately, we may be asked at some point to sacrifice our national sovereingty if we don't get our own house in order shortly.

So, yeah, perhaps I'm a bit simplistic, and maybe I don't have the most rosy view of the human race. But I find a simple, consistent approach is hard to weasel around, so I'm sticking to my guns: We need to get off of our debt "habit," let things reset to reality whilst maintaing a sense of law and order, and rebuild from there.

Mon, 01/25/2010 - 01:04 | 205047 Anonymous

you think he is coming across as a conspiracy
theorist? and that is supposed to be a pejorative?

are you denying a conspiracy given the information
he supplied?

are you denying a conspiracy where trillions of
dollars are in play?

are you denying a conspiracy when that is the nature
of life and politics?

your comment strikes me as naive under the most
charitable of opinions and i'll hold my tongue
on the other.

Mon, 01/25/2010 - 16:32 | 205623 bc0203

The author of the post didn't cite adequate sources, and in some cases his information was incorrect. This took away from his argument, and would cause some to label him a conspiracy theorist, which in some circles is still a perjorative term (I know, unbeliebable, isn't it!).
I'm saying where there's money there's corruption; corruption on a large scale can certianly be viewed as a conspiracy.
Regardless of whether it's a conspiracy or not, the patient is bleeding out on the table, and there's only so many pints of blood left. I think everyone posting here wants to put a stop to the bloodletting; we just disagree on how to do it. Damage to the internal organs is accelerating on a logarithmic scale, so the longer we argue, the less blood there will be to resuscitate the patient.

Mon, 01/25/2010 - 00:25 | 205022 Tahoe

Trust and confidence. Its been lost from the system. What is lost overnight is gained in much smaller increments. A researched and well presented piece. Thanks for your excellent effort.

Mon, 01/25/2010 - 00:20 | 205020 aus_punter

The people destroying capitalism are the ones voted into government by the people of the USA...... if they are stupid enough to go for crap such as "Change you can believe in" then what do they expect ?

Mon, 01/25/2010 - 00:09 | 205009 MarketTruth

So ZH'ers, WHAT ARE YOU GOING TO DO ABOUT THIS?

In other words, what actual steps/actions are you going to take or have taken?

Bank run?

Buying gold/silver?

Filing a lawsuit against ____?

or ???????????

(Calling your Gov rep does not count, it appears they do not care about you).

Perhaps it is time for ZH to start filing lawsuits with the evidence they have?

What are you, the ZH reader, going to do?

Mon, 01/25/2010 - 08:49 | 205154 Enkidu

MT - can you give some suggestions? I have stopped using the credit card and, for some reason, reduced any credit limits I have. I favor a bank run... and, of course, throwing out all incumbents and voting for independents.

Mon, 01/25/2010 - 09:18 | 205168 MarketTruth

Enkidu, my hopes are that ZH and other sites band together and do a massive call for their readers to make solid actions. Could be bank runs, could be demonstrations at the White House or Fed buildings... or perhaps a class-action lawsuit against.... because of outright fraud. Better still, time to pull out all your funds and let the HFT robots fight one another.

Maybe ZH can start a 'blank' article where the opening line is "The market is screwed, manipulated by the Fed and PPT (plus GS HFT to front-run you). ZH readers, the time is now as we are not going to take this bullshit anymore. ZH'ers it is time for action so today you are going to....

(and that open it up for ZH readers to comment about ACTUAL ACTIONS they are/will do TODAY).

ZH can feel free to change my bold text above as they see fit. The point being, it is time for as many bloggers and websites to call for a massive movement... or just crouch down and lick the hand that feeds you and leave us Patriots to do what is right and just.

"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that ye were our countrymen."
-- Samuel Adams, speech at the Philadelphia State House, August 1, 1776.

Mon, 01/25/2010 - 01:56 | 205034 bc0203

My over-arching goals are simple:

No debt (secured or unsecured)
Properly diversified portfoio to address current risks
Have contingency plans if things get ugly.

Not all of us can do all of these things right now, but the first two are sound advice in any environment, and I'm hearing the third from more and more intelligent people I know and trust.

Of course, if you're in a position to influence those in power, you should do so. But get your own house in order first.

Mon, 01/25/2010 - 00:08 | 205008 Anonymous

So does Kim want a bunch more government or a bunch less???
I may have missed the proposed solution to the problem in the long article.

Seems likely he voted for Obama and Obama is not behaving inconsistently with his character, so it seems at least he should be pretty happy with government today.

Mon, 01/25/2010 - 06:54 | 205137 waterdog

He wants honest government.

Mon, 01/25/2010 - 01:20 | 205056 Anonymous

i think you totally misread the article....it
had nothing to do with obama - nothing.

his thesis is also not directly related to the
amount government. rather it was related to the
integrity of money of which there can only be one -
and that would be gold...

our political and economic maladies stem from
corrupt money...

how much of the article did you read?

Mon, 01/25/2010 - 12:40 | 205318 Busy-Body

The Return of TRUE Capitalism - a layman's point of view

1) Abolish the Federal Reserve - the market itself can and would determine the appropriate interest rate levels - that is my "efficient market theory" hypothesis

2) Return to a gold standard to reign in future ill-advised congressional spending and to further instill public confidence in currency - however, that in itself is simply not enough. I am aware that under present circumstances gold/silver would be immensely higher to level-set the current gross imbalances.

3) Do not issue treasury bonds (on which interest is paid) whereby dollars are created out of thin air by the Federal Reserve banking system. Rather, have an uncompromised government control the money supply by controlling/issuing the appropriate amount of non-interest bearing currency in circulation by a matching principle that optimizes the exchange of necessary goods and services - this would then satisfy the unenlightened's fallacious point that "the debt is irrelevant and that we owe the money to ourselves" - only under this proposed scenario could this be true. In addition, this would almost entirely solve the "hidden tax" of inflation which has (since 1913) and continues to erode the purchasing power of our currency

4) Eliminate all fractional reserve banking - a true 1:1 relationship - this also shows that simply a return to the gold standard is not enough (recall that we were on the gold standard during the Great Depression, part I)

5) Reinstate Glass-Steagall to break up commercial and investment banking for obvious reasons (everyone reading thus far needs no explanation)

6) Eliminate the utilization of derivatives contracts - they are, and always have been vehicles to exacerbate the ponzi system made possible by a flawed monetary system that MUST have expanding and continuous (and recently exponential) growth in order to survive

7) Remove all taxes other than a modest tax based solely on consumption. One would find that, by adhering to the recommendations above (in particular #3) the need for virtually all taxation would be entirely unnecessary thus exposing the current reality that the income tax, among others, merely seeks to perpetuate a broken system of wealth restribution (to the elitists masquerading within the current government structure) and the dis-incentivizing nature of productive utilization of resources (chiefly labor)

8) Repeal GAAT/NAFTA and level the field that currently has exported jobs/industry off-shore in the name of lower labor costs/maximization of shareholder wealth to the benefit of the corporate elitists. Lack of internal based production of desirable global goods (for internal or external-based consumption) ALWAYS leads to trade imbalances thus having an improper import/export relationship that frequently disadvantages a nation's currency.

9) Reform the congressional terms by imposing term limits on both houses. For example, both houses having a maximum amount of two 4-year terms that cannot be consecutive. There must be, at minimum, one four-year absence (preferably two) in between the maximum of two terms by any nationally elected official. This would largely de-claw the lobbyists/special interest groups that currently plague our "democracy".

There are many other useful recommendations to be sure; however, in my humble opinion, this would be a start.

Comments appreciated.

Mon, 01/25/2010 - 00:02 | 205004 Anonymous

"The monetary system today, as it has been structured by Central Bankers, is immoral...."

if you need a sock puppet i am more than willing to lend my sock.....

i have posted profusely on this thread and am in complete agreement with your theses and observations....i did not think i would find someone so articulate and pertinent in the discussion of the issues as you....

please publish more....maybe one topic would the verbalization of that process of money creation....however it appears that you may not have accounted for the role which banks play in money creation - a topic once covered in a zh article some time ago....in other words it challenged the conventional wisdom of the central bank being the prime mover by arguing through empirical studies that the "local" banks originate creation....

anyway, i loved this article.....god i loved it....

The Death of Capitalism

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